연결재무제표 외부감사 시 타감사인 활용이 연결이익조정에 미치는 영향

Abstract

Financial Supervisory Service of Korea proclaimed load map about full adoption of IFRS at March, 2007 and decided to enforce the new financial reporting standards for listed companies mainly from 2011. As adoption K-IFRS, consolidated financial statements will be main financial reporting tools and the importance of these statements will be enhanced dramatically. It means all of investors make a decisions about the firms based on consolidated financial statements, and the transparency and reliability of these financial statements must be improved in the course of adoption of IFRS. According to practical audit procedures, principal auditors of consolidated financial statements generally use the work of another auditor for subsidiaries. However this audit procedure for practical convenience can impair transparency and reliability of consolidated financial statements. It is because the difference of external auditors between parents and subsidiaries would have chance of discretional earnings management. We search how many principle auditors use the work of another auditors practically and examine empirically the effect of using the work of another auditor on earnings management of consolidated financial statements. Therefore, we hypothesize that the more principal auditors of parents companies rely on the work of another auditor, the more will the firm manage their reported income of consolidated financial statements. We have performed empirical tests using 860 firm-year sample firms with consolidated financial statements from year 2001 to 2006. The measurements of earnings management for empirical tests are discretional accruals estimated from cross-sectional analytical model based on Kothari et al.(2005) and the extent of using another auditors are computed based on the asset in consolidated financial statements. Our results show that parents firms using more the work of another auditor made more upward reported income managements. The results imply that excessive reliance on the work of another auditor can impair the transparency and reliability of consolidated financial reporting. Therefore, regular authority should consider making subsidiaries assign same external auditors with parents companies. This study contributes to earnings management researches in that it provides empirical evidence that using the work of another auditor can have chance for upward reported earnings management in consolidated financial statements.